Property Management - What you must know about your managing agent
What you must know about your managing agent
There are five things you should consider before entrusting the management of your property to an agent
One of the biggest growth areas in the real estate industry at the moment is the management of rental property on behalf of landlords, despite the fact that buy-to-let investments now only account for about 7% of property purchases, compared to about 25% in 2004.
The main reason is that owners, as well as tenants, have come under increasing financial pressure in the past two years, and simply cannot afford to risk rental defaults. many people still own several rental properties that they bought during the boom years, and are ina situation where one bad payer could jeopardise their entire portfolio.
The most vulnerable in this respect, however, are homeowners who, having found themselves in financial distress, but unable to sell their properties in a soft market, are renting them out to cover their bond repayments, while living somewhere cheaper themselves.
While falling interest rates have steadily reduced the incidence of non-payment or part-payment among tenants since last year, this is still around 20% (one in five) in most areas and income brackets, according to the latest Rental Payment Monitor compiled by Tenant Profile Network (TPN).
In addition, low inflation and rising municipal service charges are going to make it very difficult for landlords to raise their rents by next year, which means that they will have little or no cushion if a tenant defaults.
In shorth... the need and demand for expert help in managing rental properties is set to grow even more. However, there are some important things for owners to check before entrusting the managment of their properties to an agent. These include the following:
- Ensure that the agent is registered with the Estate Agency Affairs Board and has a trust account for holding tenant deposits;
- Ensure that the agent is at least working towards obtaining an NQF 4 or NQF 5 qualification by the end of 2011, when these will become essential for an agent to practice legally;
- Ensure that the agent has proper systems in place to check on the creditworthiness and payment history of prospective tenants, and that the agent will also establish that they are not curently under debt review;
- Ensure that the agent will not under any circumstances hand over the keys to the property until the deposit and the first month's rent have been paid;
- Ensure that there is a clear, written contract detailing exactly what services the agent will provide in return for his or her management fee, and whether this is a set amount or a percentage of the rent.
Courtesy: Agent – The Official Publication of the Estate Agency Affairs Board
“Redressing the Past, Building the Future and Guiding the Real Estate Business towards Professionalism”